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A closer look at the India-Uzbekistan BIT 2024: Key provisions and implications

Herbert Smith Freehills Kramer | 19 June 2025

A closer look at the India-Uzbekistan BIT 2024: Key provisions and implications

On 27 September 2024, India and Uzbekistan signed a new bilateral investment treaty (BIT) that aims to bolster cross‑border flows while preserving each state’s policy space. The treaty – which entered into force in May 2025 – follows India’s post‑2016 treaty model, offering calibrated investor protections paired with robust safeguards for regulatory autonomy.

In this post, we highlight the key provisions of the India-Uzbekistan BIT.

Key Provisions of the India-Uzbekistan BIT

Definition of Investment

The India-Uzbekistan BIT employs a tightly defined, enterprise-based definition of “investment”, requiring an investor to have an enterprise in the host state together with its assets. This definition includes characteristics such as commitment of capital, expectation of profit, and assumption of risk, mirroring the Indian Model BIT’s move away from broad asset-based definitions. Investments must be admitted in accordance with the host state’s laws, and pre-investment activities are excluded from treaty protection.

Application and Scope

The treaty’s scope is further narrowed by express carve-outs set out in Article 2. The treaty does not apply to taxation measures, government procurement, subsidies, services supplied in governmental authority, or measures by local governments, among others. For example, any measure that a state designates as a taxation issue is non-justiciable under the BIT – a shield of note given India’s past disputes over tax-related measures. Similarly, compulsory licenses or revocation, limitation or creation of intellectual property rights are excluded from BIT claims.

Significantly, the BIT affirms the state’s right to regulate. Article 3 explicitly recognizes that each Party "shall take regulatory or other measures to ensure that development in its territory is consistent with the goals and principles of sustainable development, and other legitimate social, economic, environmental or any other public policy objectives". Non-discriminatory actions to comply with other international obligations are likewise confirmed not to breach the treaty. In addition, a dedicated Chapter III on Investor obligations imposes duties on investors to comply with host state law, anti-corruption norms, and corporate social responsibility principles. This structure – protections paired with investor obligations and exceptions – follows the approach of India’s 2016 Model BIT, aiming to curb abusive claims and safeguard public interest while still providing investment protections.

Minimum Standard of Treatment

Article 4 guarantees investments the customary international law minimum standard of treatment. The treaty expresses an exhaustive list of conduct that would breach it – denial of justice, fundamental breach of due process, manifestly arbitrary or discriminatory measures, and abuse such as coercion or duress. Full protection and security is also guaranteed but is expressly confined to physical security, echoing the Model BIT.

National Treatment

Under Article 5, Investors enjoy National Treatment, obliging the host state to accord treatment no less favourable than that given to its own investors “in like circumstances”. There is no standalone Most Favored Nation clause.

Expropriation

The BIT provides for both direct and indirect expropriation claims, allowing such measures only if they serve a public purpose, follow due process, are non-discriminatory, and are accompanied by prompt, adequate, and effective compensation based on fair market value. Notably, the treaty excludes legitimate, non-discriminatory public welfare regulations – such as those for health or environmental protection – from being treated as expropriation.

Dispute Resolution

Investors may submit claims to arbitration only after (i) filing a claim before competent domestic courts or authorities within one year of knowledge of the alleged breach; and (ii) pursuing those proceedings for at least five years from the date on which the investor first acquired knowledge of the measure in question, unless no effective remedy is reasonably available. Following that period, the investor must deliver a notice of dispute and engage in consultations for a further six months before commencing arbitration. Claims are time‑barred six years after first knowledge of the breach.

Arbitration may be brought under the ICSID Convention, ICSID Additional Facility or the UNCITRAL Rules. Notable procedural features include:

  • Dismissal of manifestly frivolous claims on an expedited basis.
  • Transparency in line with the UNCITRAL Transparency Rules.
  • Prohibition of third‑party funding, a requirement mirrored in several recent Indian treaties, including the recent India-UAE BIT.
  • Scope for joint state interpretations that are binding on tribunals, and the possibility of agreeing an appellate mechanism in future.
  • Provision for counterclaims by the host state against the investor, a significant development and the first explicit inclusion of such a provision in an Indian BIT. Article 16 allows the host state to lodge a counterclaim against the investor for breach of the investor’s obligations under the treaty (or breach of the treaty’s “object and purpose”) during an arbitral proceeding.

Conclusion

The India–Uzbekistan BIT is a prime example of India’s post-2016 BIT policy in action. It provides investors with vital protections – a baseline of fair treatment, security from expropriation, and access to neutral arbitration – but tightly frames these rights to prevent misuse and to uphold the host state’s regulatory sovereignty. The treaty’s structure and content follow India’s Model BIT closely, and match the tenor of recent treaties like the India-UAE BIT, emphasizing precision in language and balance between investor rights and state interests. There is also a significant new addition to the operative provisions, for the first time in an Indian BIT, which expressly provides for the State parties to counterclaim against investors. The India-Uzbekistan BIT, once in force, is expected to bolster investor confidence by ensuring clear rules and legal remedies, while safeguarding each country’s ability to pursue public policy goals.